Navy Purchases Nearly Half Million Gallons of Biofuel

WASHINGTON, Dec 5, 2011 (GlobeNewswire via COMTEX) -- Dynamic Fuels, LLC, a joint venture between Tyson Foods, Inc. and Syntroleum Corporation, has been awarded a contract to supply the U.S. Navy with 450,000 gallons of renewable fuels. Solazyme, Inc., a renewable oil and bioproducts company, will help Dynamic Fuels fulfill the contract, which the Navy and the USDA report is the single largest purchase of biofuel in government history.
The contract involves supplying the Navy with 100,000 gallons of jet fuel (Hydro-treated Renewable JP- 5 or HRJ-5) and 350,000 gallons of marine distillate fuel (Hydro-Treated Renewable F-76 or HRD-76). The fuel will be used as part of the Navy's efforts to develop a "Green Strike Group" composed of vessels and ships powered by biofuel.
The Navy contract follows on the heels of both companies' involvement in historic commercial airline flights using biofuel. This includes Dynamic Fuels' renewable jet fuel work with KLM Royal Dutch Airlines, Finnair, Thomson Airways and Alaska Airlines, and Solazyme's recent flight and partnership with United Airlines, which includes a letter of intent to provide 20 million gallons a year starting in 2014.
The fuel for the Navy will be manufactured at Dynamic Fuel's Geismar, Louisiana, renewable fuels plant using U.S.-sourced yellow grease (used cooking oil) as well as Solazyme's tailored algal oil as feedstocks. The fuel will be delivered to the U.S. Navy in May 2012. The Dynamic Fuels plant, which has been in operation for more than a year, is designed to convert non-food feedstocks such as algal oil, animal fats, and greases into renewable fuels.
"This award clearly demonstrates that we're building momentum for the sale and use of our renewable fuels," said Jeff Bigger, director of the Dynamic Fuels LLC Management Committee. "We've previously provided the U.S. military with fuel for testing. We believe this contract confirms they recognize the performance and environmental advantages of our fuel since they're coming back for more and are asking for a much larger volume."
"This is an historic contract and we are proud to be teaming up with Dynamic Fuels to produce and deliver the advanced biofuel to the U.S. Navy to sail the Great Green Fleet. Dynamic Fuels has been a leader in next generation advanced biofuels technology and this partnership further solidifies the progress that both of our companies are making in bringing advanced renewable fuels to commercialization," said Jonathan Wolfson, CEO, Solazyme. "Solazyme is honored to be working with the U.S. Navy and DLA-Energy in driving forward the Navy's effort under Secretary Ray Mabus to source 50 percent of its energy from renewable sources by 2020."
To see video of operations at Dynamic Fuels, click on the following link:
http://www.youtube.com/watch?v=zsI1dov9Xbw
Photos of the facility can be seen by clicking:
http://www.flickr.com/photos/tysonfoods/sets/72157625319377772/ .
About Tyson Foods
Tyson Foods, Inc., founded in 1935 with headquarters in Springdale, Arkansas, is one of the world's largest processors and marketers of chicken, beef and pork, the second-largest food production company in the Fortune 500 and a member of the S&P 500. The company produces a wide variety of protein-based and prepared food products and is the recognized market leader in the retail and foodservice markets it serves. Tyson provides products and services to customers throughout the United States and more than 130 countries. The company has approximately 115,000 Team Members employed at more than 400 facilities and offices in the United States and around the world. Through its Core Values, Code of Conduct and Team Member Bill of Rights, Tyson strives to operate with integrity and trust and is committed to creating value for its shareholders, customers and Team Members. The company also strives to be faith-friendly, provide a safe work environment and serve as stewards of the animals, land and environment entrusted to it.
The Tyson Foods, Inc. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=3224
About Syntroleum
Syntroleum Corporation owns the Syntroleum(R) Process for Fischer-Tropsch (FT) conversion of synthesis gas derived from biomass, coal, natural gas and other carbon-based feedstocks into liquid hydrocarbons, the Synfining(R) Process for upgrading FT liquid hydrocarbons into middle distillate products such as synthetic diesel and jet fuels, and the Bio-Synfining(R) technology for converting animal fat and vegetable oil feedstocks into middle distillate products such as renewable diesel and jet fuel using inedible fats and greases as feedstock. The 50/50 venture -- known as Dynamic Fuels -- was formed to construct and operate multiple renewable synthetic fuels facilities, with production on the first site beginning in 2010. The Company plans to use its portfolio of technologies to develop and participate in synthetic and renewable fuel projects. For additional information, visit the Company's web site at www.syntroleum.com
About Solazyme, Inc.
Solazyme, Inc. is a renewable oil and bioproducts company that transforms a range of low-cost plant-based sugars into high-value tailored oils. Headquartered in South San Francisco, Solazyme's renewable products can replace or enhance oils derived from the world's three existing sources -- petroleum, plants and animal fats. Initially, Solazyme is focused on commercializing its products into three target markets: (1) fuels and chemicals, (2) nutrition and (3) skin and personal care. Solazyme's oils and fuels provide compelling solutions to increasingly complex issues of fuel scarcity, energy security and environmental impact while fitting into the pre-existing multi-trillion dollar fuel infrastructure. For more information, please visit our website: http://www.solazyme.com
Solazyme(R), the Solazyme logo and other trademarks or service names are the trademarks of Solazyme, Inc.
This press release contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 about Solazyme, including statements that involve risks and uncertainties concerning: the future manufacture and delivery of jet fuel by Solazyme and the timing of such delivery; the potential purchase of fuel by United Airlines; the timing of the delivery of fuel to the U.S. Navy and what that fuel will be used for; and Solazyme's future commercialization plans. When used in this press release, the words "will," "expects," "intends" and other similar expressions and any other statements that are not historical facts are intended to identify those assertions as forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Any such statement may be influenced by a variety of factors, many of which are beyond the control of Solazyme, that could cause actual outcomes and results to be materially different from those projected, described, expressed or implied in this press release due to a number of risks and uncertainties. Potential risks and uncertainties include, among others: the ability of Solazyme and/or Dynamic Fuels to produce in-spec jet fuel at a commercially acceptable price; Solazyme's ability to access sufficient manufacturing capacity; and Solazyme's ability to maintain existing, and establish new, strategic business relationships. Accordingly, no assurances can be given that any of the events anticipated by the forward-looking statements will transpire or occur, or if any of them do so, what impact they will have on the results of operations or financial condition of Solazyme.
In addition, please refer to the documents that Solazyme, Inc. files with the Securities and Exchange Commission, including its Quarterly Reports on Form 10-Q, for a discussion of these and other risks. You are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date of this press release. Solazyme is not under any duty to update any of the information in this press release.
This news release was distributed by GlobeNewswire, www.globenewswire.com
SOURCE: Dynamic Fuels

The Russians Are Coming!

This is a nice follow up to our post on November 29th about the failed fuel delivery to Nome, Alaska. The Jones Act Actually gets in the way of a more economical solution. I will also be a historical event for the Nome and the State of Alaska.


By Laureli Kinneen, KNOM - Nome | December 5, 2011 - 1:28 pm 

Photo courtesy of Elaine Smiloff, Adak Harbormaster

A failed marine delivery of 1.6 million gallons of fuel due to November’s storm spurred the leadership at the Sitnasuak Native Corporation in Nome to get creative. They’re looking to Russian and Korean companies to keep fuel costs down in the Western Alaskan community.
Sitnasuak and a Russian shipping company may very well make history this month. Sitnasuak Native Corporation has signed a contract with Vitus Marine to deliver 1.5 million gallons of fuel to Nome – via marine tanker. The delivery in the double-hulled Ice Classed Russian tanker is scheduled for late December and will replace the 1.6 million gallons that was not delivered by Delta Western due to the November storm.
If the newly-planned delivery is successful, Sitnasuak Board Chairman Jason Evans says the voyage will mark the first time a marine fuel delivery is made to a Western Alaska community in winter.
Evans says, overall, while untraditional, the icebreaking option is significantly lower in costs than flying fuel to Nome. He says there are too many variables at this point for a specific number that consumers will eventually pay.
The Russian vessel, the Renda is currently in Vladivostok, Russia and will be inspected by the Coast Guard on Wednesday. The Jones Act states that a foreign vessel cannot carry cargo from the U.S. to the U.S., so the fuel will be purchased in Inchon Korea. Evans says there will be added costs to this mode of delivery.
When it comes to Delta Western – the company that did not deliver the original fuel purchase – Vice President Kirk Payne says he’s not sure what fair share means.
Payne says there are no lawyers involved and nothing has been filed. He says a dialogue continues between the two companies.
The double-hulled Ice-Class Russian tanker the Renda is certified to travel through four feet of ice and recently traveled through five feet of ice while delivering fuel to the Russian Far East. It’s unclear whether the Renda will dock at the inner or outer harbor once it arrives in Nome. The tanker has two kilometers of hose that could be put over the ice to the fuel depot.
The U.S. Coast Guard is getting approval for the U.S.’s only icebreaker – the Healy – to remain in the area until the delivery is made.

Wärtsilä completes unique conversion of vessel to LNG operation

We recently published an article on the conversion of Washington State Ferries to LNG propulsion. This seemed like an appropriate follow up for that article which was based on a study by the Glosten Associates.

Wärtsilä Corporation, Trade & Technical Press release, 23 November 2011

The product tanker ‘Bit Viking’ was the first vessel ever to undergo a conversion by Wärtsilä from heavy fuel oil to liquefied natural gas (LNG) operation. The conversion enables the ‘Bit Viking’ to qualify for lower nitrogen oxide (NOX) emission taxes under the Norwegian NOX fund scheme.

The unique fuel conversion of the product tanker ‘Bit Viking’, from heavy fuel oil to gas operation, has been finalised and in October the vessel was handed over to the customer, Tarbit Shipping. The re-commissioned vessel is operated by Statoil along the Norwegian coastline, and the conversion carried out by Wärtsilä enables it to qualify for lower NOX emission taxes under the Norwegian NOX fund scheme. The fund is a cooperative effort whereby participating companies may apply for financial support in return for introducing NOX reducing measures. Furthermore, liquefied natural gas (LNG) operation means lower carbon oxide emissions, and virtually no sulphur oxide or particle emissions whatsoever.

First marine dual fuel (DF) conversion

This is the first marine installation in the world to involve converting Wärtsilä 46 engines to Wärtsilä 50DF engines, and the first 50DF marine installation with mechanical propulsion. By operating on LNG, the ‘Bit Viking’ becomes one of the most environmental friendly product tankers in the world.

In August 2010, Wärtsilä announced that it had signed a turnkey project with Tarbit Shipping to convert the ‘Bit Viking’ to LNG operation. The scope of the conversion package from Wärtsilä included deck-mounted gas fuel systems, piping, two six-cylinder Wärtsilä 46 engines converted to Wärtsilä 50DF units with related control systems and all adjustments to the ship’s systems necessitated by the conversion. The vessel’s classification certificate was also updated. The engines are connected directly to the propeller shafts through a reduction gearbox, thus avoiding the electrical losses that are an unavoidable feature of diesel-electric configurations. This enables a significant improvement in propulsion efficiency, reduced fuel consumption, and corresponding reductions in emissions. This is the first LNG fuelled vessel to be classified by Germanischer Lloyd.

New LNG storage system

The ‘Bit Viking’ utilises Wärtsilä’s new LNGPac system, which enables the safe and convenient onboard storage of LNG. The two 500 cubic metre LNG storage tanks are mounted on the deck to facilitate bunkering operations and permit the bunkering of LNG at a rate of 430 cubic metres per hour. The storage tanks provide the vessel with 12 days of autonomous operation at 80 per cent load, with the option to switch to marine gas oil if an extended range is required. When visiting EU ports, which have a 0.1 per cent limit on sulphur emissions, the vessel operates on gas.

“Wärtsilä’s unique expertise and experience with dual fuel technology, as well as with fuel conversion projects, were the main reasons for us choosing them. We appreciate the technological efficiency of the Wärtsilä solutions and the expert way in which this conversion project has been handled. We are proud that the ‘Bit Viking’ is now one of the world’s most environmentally sustainable tankers in operation,” says Anders Hermansson, Technical Manager, Tarbit Shipping.

“This is a major step for Wärtsilä in consolidating its market leading position in LNG solutions for the shipping industry. The successful sea trials with this vessel provide yet further validation of the viability of LNG as the marine fuel of the future. We anticipate that this development will rapidly accelerate during the coming few years,” says Sören Karlsson, General Manager, Gas Applications, Ship Power Technology

Pacific Drilling Raises $46 Million in IPO

LUXEMBOURG--(BUSINESS WIRE)-- Pacific Drilling S.A. (NYSE:PACD - News) (NOTC:PDSA) (“Pacific Drilling” or the “Company”) announced that yesterday it closed its previously announced initial public offering of shares of common stock at a price of $8.25 per share. Pacific Drilling sold a total of 6,000,000 shares, resulting in net proceeds of approximately $46 million after deducting underwriting discounts and commissions. The underwriters have been granted a 30-day over-allotment option to purchase up to an additional 900,000 common shares.
Morgan Stanley and Deutsche Bank Securities acted as joint book-running managers for the offering. DnB NOR Markets, Howard Weil Incorporated, Pareto Securities AS and Simmons & Company International acted as co-managers.
This offering was made solely by means of a prospectus, copies of which may be obtained by contacting: Morgan Stanley & Co. LLC, Attention: Prospectus Department, 180 Varick Street, New York, NY 10014, telephone 1-866-718-1649 or by emailing prospectus@morganstanley.com or Deutsche Bank Securities Inc., Prospectus Department, Harborside Financial Center, 100 Plaza One, Jersey City, NJ 07311-3988, telephone 1-800-503-4611 or by emailing prospectus.cpdg@db.com.
A registration statement relating to this offering was declared effective by the Securities and Exchange Commission (“SEC”) on November 10, 2011. This press release shall not constitute an offer to sell or a solicitation of an offer to buy, nor shall there be any sale of these securities in any state or jurisdiction in which such an offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction.
About Pacific Drilling
Pacific Drilling is an international ultra-deepwater offshore drilling company. Pacific Drilling’s fleet consists of six ultra-deepwater drillships. The Company currently operates three recently delivered drillships, expects delivery of its fourth drillship by end of 2011, and has two additional drillships on order at Samsung to be delivered in 2013.

Contact:

Pacific Drilling S.A.
Amy Roddy, Director, Investor Relations, 1-832-255-0502
Investor@pacificdrilling.com

US Navy Alternative Fuel Test Successfully Concluded

From NAVSEA
18 November 2011

The U.S. Navy successfully concluded its largest demonstration of shipboard alternative fuel use when the Self Defense Test Ship (SDTS) arrived at Naval Surface Warfare Center Port Hueneme, Calif., at 10:37 a.m. (PST), November 17 after a 17 hour transit from the Defense Fuel Supply Point at Naval Base Point Loma

The SDTS is a decommissioned Spruance-class destroyer, ex-Paul F. Foster (EDD 964). It has been reconfigured to provide the Navy with an at-sea, remotely controlled, engineering test and evaluation platform without the risk to personnel or operational assets.

The ship received approximately 20,000 gallons of a 50-50 blend of an algae-derived, hydro-processed algal oil and petroleum F-76 from the Defense Fuel Supply Point at Naval Base Point Loma, November 16.

"How can we have an impact?" asked Assistant Secretary of the Navy (Energy, Installations and Environment) Jackalyne Pfannenstiel at the demonstration's kick-off. "We can have an impact as a technology leader, highlighting and demonstrating the viability of biofuels as we are here today. This demo, the largest to date, is a major milestone for us. More than 50 percent of our fuel goes to maritime use. When this ship arrives in Port Hueneme, we will be a giant step closer to powering our Great Green Fleet and demonstrating progress toward a sustainable energy future."

Shortly after Assistant Secretary Pfannenstiel's remarks, the ship began its transit to Naval Surface Warfare Center Port Hueneme using the 50-50 blend. While EDD 964 has four LM 2500 main propulsion gas turbines and four 501-K17 ship service gas turbine generators, the ship only operated on one LM 2500 and two 501-K17s during the demonstration, so 100 percent of ship's propulsion power and 50 percent of service power came from the algal oil/F-76 fuel blend.

Meeting the Secretary of the Navy's call for a drop-in fuel replacement, no changes were required to the infrastructure of the ship or fueling pier for the SDTS test. The demonstration also marked the only at-sea operational test of alternative fuels in the LM 2500 – the engine found in most surface combatants – before the Green Strike Group demonstration in 2012.

"For the test, a baseline run was made on the ship's transit from Port Hueneme to San Diego using F-76 fuel," said Rick Kamin, Naval Fuels and Lubricants Cross Functional Team lead. "Using the 50-50 blend on the return run to Port Hueneme, the tested engines were assessed on their abilities to perform start sequences as well as motoring and purging operations noted in Engineering Operational Sequencing System procedures. We also collected data on compressor inlet temperature, engine speed, engine start time, fuel manifold pressure, turbine outlet temperature, turbine inlet temperature, ship service gas turbine generators power output, and gas turbine main engine shaft output."

"From our perspective as the ship's operators, there was absolutely no difference, whatsoever, in the operation or performance of the ship," said Naval Surface Warfare Center Port Hueneme Division's Mike Wolfe, underway project officer. "The fuel burned just like the traditional fuel we get from the Navy and have been burning for years. We could not tell the difference. The biggest success is that a Navy ship with engines identical to those in commissioned warships operated successfully on an overnight transit with the alternative fuel without a glitch in anything. Operationally, it was absolutely a success."

The alternative fuels effort supports the Navy's overall energy strategy to increase energy security and safeguard the environment. Recent and upcoming maritime vehicle alternative fuel testing include ongoing Yard Patrol boat demonstration at Naval Academy, Annapolis, Md., and a Landing Craft, Air-Cushioned vessel demonstration scheduled for early December at Naval Surface Warfare Center Panama City, Panama City, Fla.

LNG Freight Gains on Trinidad Cargoes

From Bloomberg Business News:
14 November 2011

Demand for tankers that haul liquefied natural gas is set to climb as much as 3 percent as Trinidad and Tobago ships more cargoes to Europe and Asia amid rising U.S. shale-gas production, Lorentzen & Stemoco AS said.
About 7 million metric tons of Trinidadian LNG will travel three or four times farther as imports into the U.S. decline, creating demand for up to 12 more ships a year, Knut Stangebye Olsen, a gas analyst at the Oslo-based shipping consultant, said by phone today. A fleet of about 350 tankers carries 217 million tons of the fuel a year, he said.
The longer distances will support single-voyage charter rates for LNG carriers, which now exceed $100,000 a day, according to Stangebye Olsen, a former manager at tanker owner BW Gas Ltd. The percentage of ships at work, or fleet utilization, is at least 95 percent, he said.
“When you go past 90 percent utilization and you have some extra demand generated, the impact on the spot market rate is very substantial,” Stangebye Olsen said. “That’s why you get so much effect out of this.”
Trinidad and Tobago, the largest exporter of LNG to the U.S., is now sending 25 percent of its shipments to the country, down from 75 percent three years ago, Energy Minister Kevin Ramnarine said yesterday. Cargoes previously shipped to the U.S. are going to South America and Asia, Ramnarine said. The Caribbean nation exports 15 million tons of the fuel a year.
Japanese utilities imported 20 percent more LNG in October than a year earlier as operating rates at nuclear plants fell to the lowest levels in at least 34 years.
LNG is natural gas that’s been chilled to minus 260 degrees Fahrenheit (minus 162 degrees Celsius) to put it in a liquid state for shipping by tanker.
To contact the reporter on this story: Isaac Arnsdorf in London at iarnsdorf@bloomberg.net
To contact the editor responsible for this story: Alaric Nightingale at anightingal1@bloomberg.net

Offshore Renewable Energy: Servicing North Sea Wind Turbines

Friday, November 04, 2011

A boat with suspension, a giant robotic arm and a vessel resembling a seahorse are just three of the innovative concepts shortlisted by the Carbon Trust as part of a competition to solve the problem of transferring engineers and equipment safely on to wind turbines as far as 300km offshore in wave heights up to around three meters. The project aims to improve the economics of offshore wind by keeping turbines generating electricity in the harshest sea conditions to increase revenues by as much as £3bn for the next generation of the UK’s offshore wind farms.
Through its Offshore Wind Accelerator program, the Carbon Trust is an industry collaboration of eight UK wind farm developers - E.ON, DONG Energy, Mainstream Renewable Power, RWE Innogy, ScottishPower Renewables, SSE Renewables, Statkraft and Statoil – to reduce the costs of offshore wind.
A technically rigorous process was used by the co-funded industry collaboration to select 13 designs from 450 submissions. The technical merit of these 13 concepts suggests they have the best chances of successfully driving down cost. Today’s offshore wind farms are typically less than 25km offshore in relatively benign sea conditions, and consist of up to 100 turbines. Maintenance is possible in boats about 90% of the time when wave heights are up to about 1.5m. The new ‘round three’ offshore wind projects will be as far as 300km offshore in rougher sea conditions, and may consist of as many as 2,500 turbines. At these sites, today’s access systems would only allow transfers about 210 days a year. The aim of the competition is to find concepts that can be commercialized to make transfers possible for a minimum of 300 days a year. Among the 13 designs shortlisted are a giant robotic arm for transferring engineers and equipment to the turbine base; a boat that uses suspension inspired by Paris Dakar-winning rally cars to remain stable for the transfer; a ‘seahorse’ vessel consisting of a towering keel that minimizes movements in the ocean swell; and a giant harbor mother ship that would act as a base for engineers for weeks on end, dispatching smaller daughter craft to access the turbines. Each of the successful applicants to the competition will benefit from funding of up to £100,000 to support the design and development of their concept, as well as technical support from the eight developers in the Offshore Wind Accelerator.  The competition has selected the following thirteen designs, in three categories, to receive funding:

Transfer Systems
To transfer personnel and equipment from vessel to turbine, potentially with motion-compensation
•    Autobrow, South Boats
•    MOTS, Momac GmBH
•    Wind Bridge, Knud Hansen
•    TAS2, BMT Nigel Gee /
    Houlder

Vessels
Vessels for transporting personnel and equipment from permanent bases or mother ships to turbines, incorporating a transfer system
•    Pivoting Deck Vessel, North Sea
    Logistics
•    Nauti-Craft, Nauti-Craft
•    Fjellstrand Vessel, Fjellstrand
•    SES Vessel, Umoe Mandal
•    SolidSea, University of
    Strathclyde
•    TranSPAR, Extreme Ocean
    Innovation

Launch and Recovery Systems
Systems fitted to the permanent bases or mother ships for launching and recovering daughter craft from the sea.
•    Launch & Recovery, Offshore
    Kinetics
•    Z Port, Z Technologies
•    Launch And Recovery System,     Divex

(As published in the October 2011 edition of Maritime Reporter + Engineering News - www.marinelink.com)

10000 Ships to Use LNG Propulsion by 2020?

This report comes from from MEC Intelligence. The impact of this suggests phenomenal growth (over 9000% growth) in LNG use for maritime propulsion. This growth over the next eight years could very well change the face of marine engineering.

LNG in marine propulsion: A Disruption to the Maritime Industry?

According a new forecast by MEC intelligence nearly 10,000 vessels could be adopting LNG propulsion by 2020 triggering a huge growth in the market. Companies in all aspects of the maritime value chain– oil majors, terminals, ports, bunker suppliers, service companies, component producers, vessel owners and charterers – need to rethink their offerings.”

A ground breaking report published by the maritime cleantech market insight firm MEC Intelligence estimates more than 5% of the world fleet will adopt LNG propulsion by 2020 a huge growth considering less than 100 vessels presently.

Best Option for Newbuilds

Strict environment regulations requiring the reduction of SOx, NOx to 0.1% in ECA zone in 2015 and 0.5% globally in 2020 will stimulate demand for technologies that can eliminate or reduce emissions from vessel exhausts. The key compliance options available are either adoption of new types of fuel – low sulphur MGO or LNG – or using scrubber technology on the existing HFO fuel.

The LNG propulsion technology will potentially gain massive traction in the new build segment owing to significantly lower operation costs leading to a lower total ownership cost over the ship’s lifecycle. The total ownership cost over ship’s lifecycle for a new build LNG propelled vessel (depending on vessel type and geography) is expected to be up to 40% lower as compared to that of a fuel oil and MGO propelled vessel.

The low cost are attributed to the abundant availability and competitive prices of LNG compared to crude. Even though, the price of LNG is expected to increase with the pickup in natural gas demand in power sector it is not likely to be significant considering the new supplies from unconventional gas reserves.

Further, considering the often more than 25 year long life cycle of vessels, LNG adoption makes the ship essentially future proof in terms of further regulatory driven emission reductions in SOx, NOx, and Particulate Matter approaching in the horizon.

Huge Long Term Impact Albeit a Slow Start

Better Economics combined with development of building capacity, recent advancements in engine and fuel gas technologies are leading to a pick-up in the interest in LNG propulsion. Although availability of infrastructure and standards is a limiting factor, yet, this is expected to be only a short term inhibitors. An analysis of the existing LNG supply and terminal infrastructure shows ample availability of the fuel to be able to supply and bunkering infrastructure can be developed rapidly to meet the growing fleet.

With the development of infrastructure and IMO ratifications the fleet is expected to reach up to 1,000 vessels by 2015 but pick up rapidly to grow up to 10 times in the subsequent five years as the technology, infrastructure, and economics stack equivocally in favour of LNG propulsion. However, in case infrastructure and regulation are delayed the penetration is estimated to be significant lower yet still significant.

Unique Opportunity to Differentiate and Shape the Market

The report concludes that the adoption of LNG in vessels will call for changes in all aspects of the value chain – oil majors, terminals, ports, bunker suppliers, service companies, components suppliers, owners and charterers – requiring companies to rethink their offerings and align to a new reality sooner or later. It is one of the unique times when companies can move fast to take advantage of a new technology to differentiate themselves in the largely ‘commodity’ market for equipment and services.

About MEC Intelligence

MEC Intelligence is a leading market insight firm focused on growth in the maritime, energy, and cleantech sectors. The company brings together its unique data assets, deep experience in supporting strategic and market business development, and broad industry knowledge to develop objective perspective on industry developments and identify growth opportunities for the entire maritime, energy, and cleantech ecosystem.

British Petroleum is Back!

By Ryan Tracy And Angel Gonzalez, The Wall Street Journal

WASHINGTON—BP PLC on Wednesday got permission to drill its first well in the Gulf of Mexico since the company’s massive oil spill there last year.

The decision was expected after the U.S. Interior Department approved the company’s broader plan for four exploratory wells in the Gulf late last week. It represents another milestone in the U.K. oil company’s efforts to return to the good graces of federal regulators since it lost control of a deep-water well after a blowout in April 2010. The incident killed 11 workers and caused the largest offshore oil spill in U.S. history.

The Interior Department said the company had met new safety requirements put in place since the spill and had adhered to voluntary standards that went beyond the agency’s requirements.

The approval comes a day after the U.K. oil company reported quarterly earnings of $5.3 billion, surpassing analyst expectations and boosting hopes that the company was emerging with renewed strength from one of the darkest—and costliest—periods of its history. The company had to shed billions of dollars in assets in order to pay for spill costs, while facing the wrath of U.S. legislators, environmental activists and the public.

“We have now reached a definite turning point,” Chief Executive Bob Dudley said in a statement Tuesday. “Our operations are regaining momentum and we are facing the future with great confidence.”

BP said Wednesday’s permit came “after several months of hard work developing and implementing our new drilling standards and sharing those standards with industry partners and regulators.”

The well is located about 246 miles south of Lafayette, La., and is part of BP’s Kaskida prospect. It will be drilled in 6,034 feet of water.

To demonstrate it could contain a blowout at the new well, BP contracted with the Marine Well Containment Co., an industry consortium formed after last year’s spill. The company maintains a “capping stack” that can be scrambled to the scene of a spill and is designed to contain an out-of-control well in deep water.

Environmental groups have questioned whether the new containment system can fulfill those claims, but federal regulators have endorsed it.

“This permit was approved only after thorough well design, blowout preventer, and containment capability reviews,” Michael Bromwich, director of the Interior Department’s Bureau of Safety and Environmental Enforcement, said Wednesday.

BP, one of the largest leaseholders in the U.S. Gulf and until the spill one of the most successful wildcatters there, can now join the flock of big oil and gas companies returning to the oil-rich area. On Tuesday, Hess Corp. said it was moving forward with the $2.3 billion development of the Tubular Bells deep-water oil and gas project in the Gulf—the helm of which it took over from BP in the wake of the Deepwater Horizon spill.

The Interior Department said it has approved permits for 46 deep-water wells since February, when a company first demonstrated it could contain a deep-water spill.
(c) 2011 Dow Jones & Company, Inc

Where are the Jobs?

In a recent Op-Ed piece for  The Wall Street Journal, Harold Ford Jr., wrote about several major projects which will provide several thousand jobs in various parts of the country.

 A brief listing of the projects he mentioned included:

• Two new build oil tankers in the Philadelphia Shipyard

• Alaska, 500 off-shore drilling leases to move forward

• New-York, Natural Gas drilling to commence after lifting Hydraulic Fracturing moratorium

• Ohio, new steel-mill to be built in  Youngstown

• Multi state pipeline project from  U.S. Gulf Coast to Canada

The main point that Mr. Ford was getting at in his Op-Ed is that thousands of jobs would be created if policies were lifted to allow it. These are real jobs being prevented from starting due to government red-tape.

 The politicians are continually posturing over how to fix the nations employment problem and in turn, fixing our economy.

I will say, that there are jobs out there. There are industries that are succeeding despite the downturn. Some of the jobs Mr. Ford  outlined in his comments are slightly more complicated than a simple "green light" from the Government. For instance, the Multi-state pipeline requires not only an "OK" from the EPA, but also from each of the states it passes through.

The fact that the two oil tanker builds in Philadelphia are pending is miraculous, considering Exxon could have taken the builds to Korea at half the cost. So in addition to authorizing these builds, I would suggest we take a hard look at how the Historic Philadelphia Shipyards received these contracts. Perhaps there's some value added element that has not been reported on yet, and other industries, who are losing jobs to Korea and China, could learn from.

There's a lot that can be done, and lifting government red-tape is only one step. We don’t necessarily support recent jobs bills, but we do believe that any jobs bill passed have elements that begin to lift regulations that hinder job creation.

(Mr. Ford, a former Democratic member of Congress from Tennessee, is a visiting professor at New York University.)

K. Swanson